The 2020 financial statements of Outdoor Waterworks Inc. follow: Outdoor Waterworks Inc. Income Statement For Year Ended December 31, 2020 Net sales....... $966.000 Cost of goods sold: Inventory, Dec. 31, 2019....... $ 75.360 Purchases... 600.840 Goods available for sale.......... S676.200 Inventory. Dec. 31. 2020......... Cost of goods sold................ 617.160 UATION Gross profit from sales........... S348.840 Operating expenses........... 273.360 Operating profit................. $ 75.480 Interest expense........ 11.400 Profit before taxes............... $ 64.050 Income taxes... 18.864 Profit..... $ 45.216 Outdoor Waterworks Inc. Balance Sheet December 31, 2020 Assets Cash... S 22.200 Current non-strategic investments..... 24.480 Accounts receivable, net................. 52.080 Notes receivable.. 10,560 Inventory... 59.040 Prepaid expenses.... 5,760 Plant and equipment, net...... 326.520 Total assets... $500.640 Liabilities and Equity Accounts payable...... S 48.840 Accrued wages payable.. 6,240 Income taxes payable.. 6.960 Long-term note payable, secured by mortgage on plant..... 114.000 Common shares, 160.000 shares....... 192.000 Retained earnings 132.600 Total liabilities and equity...... $500.640 Assume the following: - All sales were on credit The long-term note payable is due in 2023, which no current portion. On December 31, 2019, balance sheet, the assets totalled $432,720, common shares were $192,000. and retained earnings were $107,640. Required (please answer the questions in the sheets attached): 1. Calculate the following (44 points): a. Current ratio b. Quick ratio c Days' sales uncollected d. Inventory turnover e Days' sales in inventory f. Ratio of pledged plant assets to secured liabilities B Times interest earned h. Profit margin Total asset turnover 1. Return on total assets k Returns on common shareholders' equity 2. Identify whether the ratios calculated above compare favourably or unfavourably to the industry averages (Refer to the industry exhibit below). Make sure you comment on all of the ratios (26 points) Exhibit: 2020 Playground Equipment Industry Average Ratios Current 1.6:1 Tires Interest earned 50 times Quick ratio. La Profit margin Accounts receivable turnover 16 times Gross profit ratio. Days' sales uncollected 21 days Return on total assets... 20N Inventory turnover Times Return on common shareholders' equity... 32.73 Days' sales in inventory 70 days Book value per common share Totalasset over 2.3 times Rookvale per preferred share. $15.00 Accounts payable turnover Earnings per share 519 Debati Price-carnings per share Dividend yield E tio 65% edged to secured
